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Ministers face backlash over proposals to lift freeze on fuel duty to fund £20bn NHS boost

Tory MP said the suggestion would go down like a 'bucket of cold sick'

Lizzy Buchan
Political Correspondent
Tuesday 03 July 2018 10:18 BST
Ministers are reportedly considering scrapping the freeze on fuel duty
Ministers are reportedly considering scrapping the freeze on fuel duty (Reuters)

The government is facing a backlash over reports that it is planning to lift the freeze on fuel duty, with one former minister saying the plans would go down like a "bucket of cold sick".

Ministers are believed to be mulling an end to the eight-year ban on tax hikes, and giving serious consideration to the prospect of an inflation linked increase on fuel, which would raise more than £800m in the first 12 months.

The move, first reported by The Guardian, comes after Theresa May announced a £20bn cash boost for the NHS, which would be partly funded by money clawed back from Brussels after Britain leaves the EU, known as the "Brexit dividend".

The Treasury is under pressure to come up with a plan to fund the NHS pledge, as Ms May has acknowledged that tax rises could be needed but failed to give further detail.

Ministers are also thought to be considering lifting the freeze on alcohol duty announced in the last budget, which costs the Treasury some £200m a year.

Tory former minister Robert Halfon said that the fuel plans would go down "like a bucket of cold sick", as hard-working families and businesses were likely to be hit hardest.

He told The Independent: "I was horrified to see the story, if it is true, as it would have a huge impact on not just motorists but businesses too.

"The price of fuel has gone up hugely already. I think 15p for diesel and 13p for for petrol. I think it would be entirely the wrong thing to be putting up fuel duty.

"People think it if you have a car then you are wealthy, but that is not the case. This will hit people in rural areas without good transport links."

The Fair Fuel UK campaign posted on Twitter: "£1.1bn extra VAT from drivers since July 2017 = 37,000 nurses or 13,000 doctors.

"What has this profligate government spent motorists' hard earned cash on?"

Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), said: “If they don’t [lift the freeze] the deficit hole will get even bigger.

"The challenge of finding the money for the NHS, keeping the public finances on the track the chancellor might want, would all be harder if you continued freezing it.

“I presume that the Treasury is finding it difficult to say we can just squeeze spending in areas such as defence or schools or justice or working age welfare. That leaves them the option of either ditching the deficit target and borrowing more, or going for some tax rises.”

Anti-Brexit campaigners also seized on the news as a sign of the impact of leaving the EU on the economy and warned that there was "no Brexit dividend".

Wes Streeting, who backs the People’s Vote campaign, said: "Theresa May has tried to pretend that an imaginary Brexit dividend will be able to pay for funding the NHS and other national priorities, but now the truth is becoming clear: there is no Brexit dividend, only a Brexit deficit and it's going to mean paying more for things like fuel and alcohol.

“Brexit uncertainty is already hitting the economy, costing the public finances hundreds of millions of pounds a week and increasing pressure on the cost of living. And the situation will only deteriorate if we crash out of the EU on hard terms, as the Brexiters in Government want.”

A Treasury spokesperson said: "As the prime minister and chancellor have made clear, taxpayers will have to contribute a bit more, in a fair and balanced way, to support the NHS we all use.

"We will listen to views about how we do this and will set out plans at future fiscal events.”

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